I would like to get step by step calculation on each ratio (answered already provided), please refer to the attached Celgene and Gilead financial statement.

Thank you.

Students' Name: Ashley Tallman Irma Suryaty Professor's Name: Professor Kimberly Byrd Course Title: ACCT 504 Accounting and Finance: Managerial Use & Analysis Date Submitted: 10/12/2017 Project Title: A Financial Statement Analysis A Comparative Analysis of Celgene Corporation and Gilead Sciences, Inc. DeVry University 2017 Students' Name: Ashley Tallman Irma Suryaty Professor's Name: rofessor Kimberly Byrd Course Title: ng and Finance: Managerial Use & Analysis Date Submitted: 10/12/2017 Project Title: nancial Statement Analysis of Celgene Corporation and Gilead Sciences, Inc. DeVry University 2017 Complete one paragraph, profiling each company's business, including information such as a brief history, where they are located, number of employees, the products they sell, and so forth. Please reference any websites that you used for the Profiles on the Bibliography tab. Incorporated in the State of Delaware in 1986 and headquartered in Summit, New Jersey, Celgene Corporation is a bio-pharmaceutical company engaged primarily in the discovery, development, and commercialization of innovative therapies for the treatment of cancer and inflammatory diseases. Robert J. Hugin is the CEO and the Executive Chairman of the company. Celgene Corporation manufactures, markets, and/or distributes more than 7 drugs in the United States and more than 300 clinical trials at major medical centers use compounds from Celgene. The company employs approximately 6,971 employees all around the world. The total revenue of the company is $9.07 billion with total assets worth $27.05 Billion. The ticker symbol of company is CELG and its stock is publically traded on the Nasdaq Stock Market. Incorporated in the State of Delaware in 1987 and headquartered in Foster City, California, Gilead Sciences, Inc. is a bio-pharmaceutical company engaged primarily in the discovery, development, and commercialization of innovative medicines in areas of unmet medical needs for the treatment of life-threatening illnesses. John F. Milligan is the CEO and John C. Martin is the Executive Chairman of the company. Gilead Sciences manufactures and operates in more than 30 countries worldwide with primary areas of focus including cardiovascular, hematology/oncology and inflammation/respiratory, human immunodeficiency virus (HIV), liver diseases such as chronic hepatitis C virus (HCV), and chronic hepatitis B virus (HBV). The company employs approximately 8,000 employees all around the world. The total revenue of the company is $32.17 billion with total assets worth $51.84 billion. The ticker symbol of company is GILD and its stock is publically traded on the Nasdaq Stock Market. Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab, and also include your comm The 2015 financial statements used to calculate these ratios are available in the Investor Relations section of the Celgene Cor Earnings per Share of Common Stock (basic - common) Current Ratio Gross (Profit) Margin Percentage Rate of Return (Net Profit Margin) on Sales Inventory Turnover Days' inventory outstanding (DIO) Accounts Receivable Turnover Days' Sales Outstanding (DSO) Asset turnover Rate of Return on Total Assets (ROA) Debt Ratio Times-Interest-Earned Ratio Dividend Yield (Please follow the Course Project instructions to calculate the current dividend yield.) Rate of Return on Common Stockholders' Equity (ROE) Free cash flow Price-Earnings Ratio (Multiple) (Please see the Course Project instructions for the dates to use for this ratio.) n this tab, and also include your commentary. r Relations section of the Celgene Corporation and Gilead Sciences, Inc website Celgene Corporation As per Income Statement Gilead Sciences, Inc $2.02 Current assets Current liabilities $9,400 $1,968 = 4.78 $24,763 $9,891 = Gross margin Net sales $8,741 $9,161 = 95.4% $28,145 $32,151 = Net income Net sales $1,602 $9,161 = 17.5% $18,106 $32,151 = Cost of goods sold Average inventory $420 $418 1.0 times $4,006 $1,671 365 Inventory turnover 365 1.0 = 363 days 365 2.4 = Net sales (assume all sales are credit sales) $9,161 = 7.1 $32,151 = Average net accounts receivable $1,294 365 Accounts receivable turnover 365 7.1 Net sales Average total assets $9,161 $22,197 Net Income Average Total Assets Total Liabilities Total Assets $5,245 = 51.5 days 365 6.1 = = 0.41 $32,151 $43,252 = $1,602 $22,197 = 7.22% $18,106 $43,252 = $21,134 $27,053 = 78.1% $33,305 $51,839 = Income before Interest and Taxes Interest expense Dividend per share of common stock (finance.yahoo.com) Nike 05/31/2016, 12/31/2015) Market Price perUnder shareArmour of common stock (finance.yahoo.com Nike 05/31/2016, Under Armour 12/31/2015) Net income - Preferred dividends Average common stockholders' equity $2,330 $311 = 7.5 $22,193 $688 = $0.00 $143.50 = 0.0% 1.29 $101.19 = 25.7% $22,193 $17,466 = $1,602 $6,222 Source: morningstar.com Market Price per share of common stock (finance.yahoo.com Nike 05/31/2014, Under Armour 12/31/2014) Earnings per share = = $143.50 $2.02 = $2,198M 71.04 = $101.19 $12.37 = ciences, Inc $12.37 2.50 87.5% 56.3% 2.4 times 152 days 6.1 59.5 days 0.74 41.9% 64.2% 32.3 1.27% 127.1% $19,582M 8.18 Interpretation and comparison between the two companies' ratios (reading Chapter 13 will help you prepare the commentary). The comparison of the ratios is an important part of the project. A good approach is to briefly explain what the ratio tells us. Indicate whether a higher or lower ratio is better. Then compare the two companies on this basis. Remembereach ratio below requires a comparison. Earnings per Share (basic - common): This ratio calculates the share of each stockholder, if the net income is distributed as dividend. Gilead Sciences has a higher EPS of $12.37 as compared to $2.02 for Celgene Corporation. As higher returns are better, Gilead Science has a better EPS. Current Ratio: This ratio measures the ability of the business to pay off its short-term liabilities using its current assets. A higher ratio is better, the ratio of Celgene Corporation stood at 4.78, which is higher than Gilead Sciences, Inc at 2.50. It indicates Celgene Corporation is more efficient to pay its short-term liabilities, when compared to Gilead Sciences, Inc Gross (Profit) Margin Percentage: This ratio calculates the profitability of the company on selling its merchandise. Celgene Corporation has a higher gross margin of 95.4% compared to 87.5% for Gilead Sciences, Inc. This shows that Celgene Corporation converts its inventory more rapidly into profit as compared to Gilead Sciences. Rate of Return (Net Profit Margin) on Sales: This is a profitability ratio that measures the net income earned for each dollar of sales generated. The ratio for Gilead Sciences is higher at 56.3% compared to 17.5% for Celgene Corporation. Gilead Sciences operating expenses are much lower when compared to Celgene Corporation. Inventory Turnover is an efficiency ratio which shows the efficiency of business to convert its inventory into sales. The ratio of Gilead Sciences stood at 2.4 which is significantly higher than 1.0 of Celgene Corporation. This concludes that Gilead Sciences is more efficient in converting its inventory into sale when compared to Celgene Corporation. Days Inventory Outstanding: The ratio determines the number of days the business takes to sell all its inventory. The calculation suggests that Gilead Sciences takes 152 days in converting its inventory into sale whereas Celgene Corporation takes 363 days. This indicates that Gilead Sciences handles its inventory in a more efficient manner. Accounts Receivable Turnover: This is an efficiency ratio and calculates how efficiently the company is in converting its accounts receivables into cash. The ratio of Celgene Corporation stood higher at 7.1 as compared to 6.1 for Gilead Sciences. Celgene Corporation is more efficient converting its account receivables. Days Sales Outstanding: This ratio calculates the number of days it takes to the business to collect is accounts receivables. Celgene Corporation's 52 days is slightly better when compared to 60 days for Gilead Sciences in collecting its accounts receivables. Asset Turnover: This is a ratio that measures the efficiency of the business in utilizing its assets for generating revenue. The ratio of Gilead Sciences stood higher at 0.74 as compared to 0.41 of Celgene Corporation. This shows that Gilead Sciences is more efficiently utilizing its assets in generating revenue compared to Celgene Corporation. Rate of Return on Total Assets: This ratio is used to measure the efficiency of the business in generating net income from its assets. Gilead Sciences' ratio stood higher at 41.9% as compared to 7.22% for Celgene Corporation, indicating that Gilead Sciences is making a more efficient utilization of its assets in generating net income compared to Celgene Corporation. Debt Ratio: This ratio compares the total liabilities of the business with its total assets and determines the solvency of the business. The debt ratio of Gilead Sciences was lower (64.2%) than for Celgene Corporation (78.1%). Gilead Sciences' lower ratio is better as it indicates that it has lower on relative debts compared to Celgene Corporation. Debt Ratio: This ratio compares the total liabilities of the business with its total assets and determines the solvency of the business. The debt ratio of Gilead Sciences was lower (64.2%) than for Celgene Corporation (78.1%). Gilead Sciences' lower ratio is better as it indicates that it has lower on relative debts compared to Celgene Corporation. Times-Interest-Earned Ratio: Times Interest Earned calculates the ability of the business to pay its interest obligations. The ratio of Gilead Sciences stood higher at 32.3 as compared to 7.5 for Celgene Corporation. This indicates a better ability for Gilead Sciencesto pay its interest obligations when compared to Celgene Corporation Dividend Yield: This ratio calculates cash dividend distributed by business to shareholders in relation to market value per share. The ratio for Gilead Sciences is 1.27% whereas Celgene Corporation has no dividend yield as it did not pay any dividends in 2015. Rate of Return on Common Stockholder Equity: Return on Equity measures the ability of the company to utilize its stockholders' investments. The ratio of Gilead Sciences is higher at 127.1% compared to 25.7% for Celgene Corporation. This indicates a more efficient utilization of stockholders' investments by Gilead Sciences when compared to Celgene Corporation. Free Cash Flow: Free cash flow is the money that is available with the company that can be used for future expansion, making acquisitions, or for distributing dividends. The free cash flow of Gilead Sciences is significantly higher ($19,582 million) than Celgene Corporation ($2,198 million). Price to Earnings Ratio: This is a market prospect ratio and is used to calculate the market value of the stock in relation to its current earnings. The ratio of Celgene Corporation is higher at 71.04 as compared to 8.18 for Gilead Sciences. The higher ratio of Celgene Corporation indicates that the investors are willing to pay more for the stock of Celgene Corporation. You all get the chance to play the role of financial analyst below. The summary should be a comparison of each company's performance for each major category of ratios listed below. Focus on major differences as you compare each company's performance. A nice way to conclude is to state which company you feel is the better investment and why. Ability to pay Current Liabilities: Celgene Corporation has a higher ability to pay its liabilities compared to Gilead Sciences, Inc, as the current ratio of Celgene Corporation is higher than Gilead Sciences, Inc. The ratio of Gilead Sciences, Inc. is low in comparison to the Celgene Corporation. However, the ratio of Gilead Sciences, Inc. is good at 2.5 which is higher than ideal ratio of 2 and suggests that Gilead Sciences, Inc. is also capable of paying its current liabilities in time using its current assets. Measuring Turnover: The turnover ratios of both companies have given mixed results. The inventory turnover ratio of Gilead Sciences, Inc. is higher than Celgene Corporation indicating a better conversion of inventory into sale by Gilead Sciences, Inc. On the other hand, the accounts receivable turnover of Celgene Corporation is higher than Gilead Sciences, Inc. indicating that Celgene Corporation is more efficient in collecting its accounts receivable as compared to Gilead Sciences, Inc. We conclude that the turnover ratios for both the companies are more or less similar. Measuring Leverage: The debts in comparison to total assets of Gilead Sciences, Inc. are less than Celgene Corporation as its debt ratio is lower. Lower debts suggest a low leveraging of the company and that it can more eaasily secure loans from financial institutions. The interest coverage of Gilead Sciences, Inc. is much better than Celgene Corporation, suggesting that Gilead Sciences, Inc. has a better ability to pay its interest obligations as compared to Celgene Corporation. Stock as an Investment: Gilead Sciences, Inc. declares dividends whereas Celgene Corporation does not. This means that from the perspective of an investor Gilead Sciences, Inc. is a good option as it provides returns in the form of dividend. The price to earnings ratio of Celgene Corporation, however, is much higher which means that in the market, Celgene Corporation stock has more value (investors are willing to pay more for the stock based on its earnings). Gilead Sciences, Inc. has a higher positive free cash flow meaning that the company has sufficient funds to make acquisitions and for expansion. As an investment, the goals of the individual investor must be determined - whether they seek immediate dividend returns or a greater future stock value. Conclusion: The ratio analysis of both the companies has mixed results. During analysis some ratios of Gilead Sciences, Inc. were better whereas some ratios of Celgene Corporation are better. The solvency ratios of Celgene Corporation are higher and better than Gilead Sciences Inc. Gilead Sciences, Inc. also pays regular dividends to its stockholders as opposed to Celgene Corporation's not paying dividends. Gilead Sciences, Inc. also has ample free cash flow that it can utilize for expansion and for paying dividends to stockholders in case of losses. The profitability of Gilead Sciences, Inc. is also higher than Celgene Corporation which could also increase in coming years. Thus, we conclude that the stock of Gilead Sciences Inc. is a better overall option for investment compared to Celgene Corporation. Your textbook and any information that you use to profile the companies should be cited as a reference below. Profiles: Celgene Corporation: https://www.forbes.com/companies/celgene/ Celgene Corporation: http://www.celgene.com/about/ Gilead Sciences, Inc: https://www.forbes.com/companies/gilead-sciences/ Gilead Sciences, Inc: http://www.gilead.com/about/ Free Cash Flow (2015) Celgene Corporation Retrieved from: http://financials.morningstar.com/cash-flow/cf.html?t=C Free Cash Flow (2015) Gilead Sciences, Inc. Retrieved from: http://financials.morningstar.com/cash-flow/cf.html?t=G Form 10-K (2015) Celgene Corporation Retrieved from: http://ir.celgene.com/sec.cfm?view=all Form 10-K (2015) Gilead Sciences, Inc Retrieved from: http://investors.gilead.com/phoenix.zhtml?c=69964&p=irolHistorical Price. Celgene Corporation Retrieved from: https://finance.yahoo.com/quote/CELG/history?p=CELG Historical Price. Gilead Sciences, Inc. Retrieved from: https://finance.yahoo.com/quote/GILD/history?p=GILD CELGENE CORP /DE/ FORM 10-K (Annual Report) Filed 02/11/16 for the Period Ending 12/31/15 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 86 MORRIS AVENUE SUMMIT, NJ 07901 (908)673-9000 0000816284 CELG 2834 - Pharmaceutical Preparations Biotechnology & Drugs Healthcare 12/31 http://www.edgar-online.com Copyright 2016, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-34912 CELGENE CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 86 Morris Avenue Summit, New Jersey (Address of principal executive offices) 22-2711928 (I.R.S. Employer Identification No.) 07901 (Zip Code) (908) 673-9000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $.01 per share Contingent Value Rights NASDAQ Global Select Market NASDAQ Global Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer x Non-accelerated filer o Accelerated filer o Smaller reporting company o (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act). Yes o No x The aggregate market value of voting stock held by non-affiliates of the registrant on June 30, 2015 , the last business day of the registrant's most recently completed second quarter, was $91,555,862,650 based on the last reported sale price of the registrant's Common Stock on the NASDAQ Global Select Market on that date. There were 781,664,535 shares of Common Stock outstanding as of February 5, 2016 . Documents Incorporated by Reference The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2015. The proxy statement is incorporated herein by reference into the following parts of the Form 10-K: Part II, Item 5.(d) Part III, Item 10. Part III, Item 11. Part III, Item 12. Part III, Item 13. Part III, Item 14. Equity Compensation Plan Information. Directors, Executive Officers and Corporate Governance. Executive Compensation. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Certain Relationships and Related Transactions, and Director Independence. Principal Accountant Fees and Services. Table of Contents CELGENE CORPORATION ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS Item No. Page Part I 1. Business 1A. Risk Factors 17 1 1B. Unresolved Staff Comments 29 2. Properties 30 3. Legal Proceedings 30 4. Mine Safety Disclosures 30 Part II 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 6. Selected Financial Data 33 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 34 7A. Quantitative and Qualitative Disclosures About Market Risk 54 8. Financial Statements and Supplementary Data 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 118 9A. Controls and Procedures 118 9B. Other Information 59 120 Part III 10. Directors, Executive Officers and Corporate Governance 120 11. Executive Compensation 120 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 120 13. Certain Relationships and Related Transactions, and Director Independence 120 14. Principal Accountant Fees and Services 120 15. Exhibits, Financial Statement Schedules 121 Signatures and Power of Attorney 126 Part IV Table of Contents PART I ITEM 1. BUSINESS Celgene Corporation, together with its subsidiaries (collectively \"we,\" \"our,\" \"us,\" \"Celgene\" or the \"Company\"), is an integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of innovative therapies for the treatment of cancer and inflammatory diseases through next-generation solutions in protein homeostasis, immuno-oncology, epigenetics, immunology and neuro-inflammation. Celgene Corporation was incorporated in the State of Delaware in 1986. Our primary commercial stage products include REVLIMID , POMALYST /IMNOVID , ABRAXANE , OTEZLA , VIDAZA , azacitidine for injection (generic version of VIDAZA ), THALOMID (sold as THALOMID or Thalidomide Celgene TM outside of the United States), and ISTODAX . In addition, we earn revenue through licensing arrangements. We continue to invest substantially in research and development in support of multiple ongoing proprietary clinical development programs which support our existing products and pipeline of new drug candidates. Our clinical trial activity includes trials across the disease areas of hematology, oncology, and inflammation and immunology. REVLIMID is in several phase III trials covering a range of hematological malignancies that include multiple myeloma, lymphomas, chronic lymphocytic leukemia (CLL) and myelodysplastic syndromes (MDS). POMALYST /IMNOVID was approved in the United States and the European Union (EU) for indications in multiple myeloma based on phase II and phase III trial results, respectively, and an additional phase III trial is underway with POMALYST /IMNOVID in relapsed and refractory multiple myeloma. In solid tumors, ABRAXANE is currently in various stages of investigation for breast, pancreatic and non-small cell lung cancers. In inflammation and immunology, OTEZLA is being evaluated in phase III trials for Behet's disease and expanded indications in psoriatic arthritis and plaque psoriasis. We also have a growing number of potential products in phase III trials across multiple diseases. In the inflammation and immunology therapeutic area, we have phase III trials underway for ozanimod in ulcerative colitis (UC) and relapsing multiple sclerosis (RMS) and for GED-0301 in Crohn's disease. In hematology, phase III trials are underway for CC-486 in MDS and acute myeloid leukemia (AML), for AG-221 in AML, and for luspatercept in MDS. On August 27, 2015, we acquired all of the outstanding common stock of Receptos, Inc. (Receptos) which resulted in Receptos becoming our wholly-owned subsidiary. Receptos' lead drug candidate, ozanimod, is a small molecule that modulates sphingosine 1-phosphate 1 and 5 receptors and it is in development for immune-inflammatory indications, including inflammatory bowel disease and RMS. The acquisition of Receptos also included other pipeline and pre-clinical stage compounds. In clinical trial results, ozanimod demonstrated several areas of potential advantage over existing oral therapies for the treatment of UC and RMS, including its cardiac, hepatotoxicity and lymphocyte recovery profile. The phase III TRUE NORTH trial in UC is currently underway with data expected in 2018. The phase III RADIANCE and SUNBEAM RMS trials are ongoing and data are expected in the first half of 2017. See Note 2 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for more information related to our acquisition of Receptos. Beyond our phase III programs, we have access to a growing early-to-mid-stage pipeline of novel potential therapies to address significant unmet medical needs that consists of new drug candidates and cell therapies developed in-house, licensed from other companies or able to be optioned from collaboration partners. We believe that continued use of our primary commercial stage products, participation in research and development collaboration arrangements, depth of our product pipeline, regulatory approvals of new products and expanded use of existing products will provide the catalysts for future growth. 1 Table of Contents The diseases that our primary commercial stage products are approved to treat are described below for the major markets of the United States, the European Union and Japan. Approvals in other international markets are indicated in the aggregate for the disease indication that most closely represents the majority of the other international approvals. REVLIMID (lenalidomide): REVLIMID is an oral immunomodulatory drug marketed in the United States and many international markets for the treatment of patients with the following indications: Disease Geographic Approvals Multiple myeloma (MM) Multiple myeloma in combination with dexamethasone, in patients who have received at least one prior therapy - United States - European Union - Japan - Other international markets Multiple myeloma in combination with dexamethasone for newly diagnosed - United States (Approved February 2015) patients - Japan (Approved December 2015) Adult patients with previously untreated multiple myeloma who are not eligible for transplant - European Union (Approved February 2015) Myelodysplastic syndromes (MDS) Transfusion-dependent anemia due to low- or intermediate-1-risk MDS associated with a deletion 5q abnormality with or without additional cytogenetic abnormalities - United States - Other international markets Transfusion-dependent anemia due to low- or intermediate-1-risk MDS in patients with isolated deletion 5q cytogenetic abnormality when other options are insufficient or inadequate - European Union MDS with a deletion 5q cytogenetic abnormality. The efficacy or safety of REVLIMID for International Prognostic Scoring System (IPSS) intermediate-2 or high risk MDS has not been established. - Japan Mantle cell lymphoma (MCL) in patients whose disease has relapsed or progressed after two prior therapies, one of which included bortezomib - United States In January 2016, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for treatment with REVLIMID in adult patients with relapsed or refractory mantle cell lymphoma. 2 Table of Contents ABRAXANE (paclitaxel albumin-bound particles for injectable suspension): ABRAXANE is a solvent-free chemotherapy product which was developed using our proprietary nab technology platform. This protein-bound chemotherapy agent combines paclitaxel with albumin. ABRAXANE is approved for the treatment of patients with the following indications: Disease Geographic Approvals Breast Cancer Metastatic breast cancer, after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated. - United States - Other international markets Metastatic breast cancer in adult patients who have failed first-line treatment - European Union for metastatic disease for whom standard, anthracycline containing therapy is not indicated Breast cancer - Japan Non-Small Cell Lung Cancer (NSCLC) Locally advanced or metastatic NSCLC, as first-line treatment in - United States combination with carboplatin, in patients who are not candidates for curative - European Union (Approved March 2015) surgery or radiation therapy - Other international markets NSCLC - Japan Pancreatic Cancer Metastatic adenocarcinoma of the pancreas, a form of pancreatic cancer, as first line treatment in combination with gemcitabine - United States - European Union - Other international markets Unresectable pancreatic cancer - Japan Gastric cancer - Japan POMALYST /IMNOVID -(pomalidomide) 1 : POMALYST /IMNOVID is a proprietary, distinct, small molecule that is administered orally and modulates the immune system and other biologically important targets. POMALYST /IMNOVID is approved for the treatment of patients with the following indications: Disease Geographic Approvals Multiple myeloma, in combination with dexamethasone, for patients who have - United States received at least two prior therapies, including lenalidomide and a proteasome inhibitor and have demonstrated disease progression on or within 60 days of completion of the last therapy Relapsed and refractory multiple myeloma, in combination with - European Union dexamethasone, for adult patients who have received at least two prior therapies including both lenalidomide and bortezomib and have demonstrated disease progression on the last therapy Relapsed and refractory multiple myeloma for patients who have received REVLIMID or bortezomib - Japan (Approved March 2015) received regulatory approval for pomalidomide under the trade name POMALYST in the United States and Japan and under the trade name IMNOVID in the European Union. 1 We 3 Table of Contents OTEZLA (apremilast): OTEZLA is an oral small-molecule inhibitor of phosphodiesterase 4 (PDE4) specific for cyclic adenosine monophosphate (cAMP). PDE4 inhibition results in increased intracellular cAMP levels. OTEZLA is approved for the treatment of patients with the following indications: Disease Geographic Approvals Psoriatic arthritis Adult patients with active psoriatic arthritis - United States Adult patients with active psoriatic arthritis who have had an inadequate - European Union (Approved January 2015) response or who have been intolerant to a prior DMARD therapy Psoriasis Patients with moderate to severe plaque psoriasis who are candidates for - United States phototherapy or systemic therapy - Other international markets Adult patients with moderate to severe chronic plaque psoriasis who - European Union (Approved January 2015) failed to respond to or who have a contraindication to, or are intolerant to other systemic therapy including cyclosporine, methotrexate or psoralen and ultraviolet-A light VIDAZA (azacitidine for injection): VIDAZA is a pyrimidine nucleoside analog that has been shown to reverse the effects of DNA hypermethylation and promote subsequent gene re-expression. VIDAZA is a Category 1 recommended treatment for patients with intermediate-2 and high-risk MDS, according to the National Comprehensive Cancer Network. The U.S. regulatory exclusivity for VIDAZA expired in May 2011. After the launch of a generic version of VIDAZA in the United States by a competitor in September 2013, we experienced a significant reduction in our U.S. sales of VIDAZA . In 2013, we contracted with Sandoz AG (Sandoz) to sell a generic version of VIDAZA in the United States, which we supply, and we recognize net product sales from our sales to Sandoz. Regulatory exclusivity for VIDAZA is expected to continue in Europe through 2019. VIDAZA is marketed in the United States and many international markets for the treatment of patients with the following indications: Disease Geographic Approvals Myelodysplastic syndromes (MDS) All French-American-British (FAB) subtypes - United States Intermediate-2 and high-risk MDS - European Union - Other international markets MDS - Japan Chronic myelomonocytic leukemia with 10% to 29% marrow blasts without myeloproliferative disorder - European Union - Other international markets Acute myeloid leukemia (AML) with 20% to 30% blasts and multi-lineage - European Union dysplasia - Other international markets Acute myeloid leukemia with >30% bone marrow blasts according to the WHO classification in patients aged 65 years or older who are not eligible for haematopoietic stem cell transplantation. 4 - European Union (Approved October 2015) Table of Contents THALOMID (thalidomide): THALOMID , sold as THALOMID treatment of patients with the following indications: or Thalidomide Celgene TM Disease outside of the United States, is administered orally for the Geographic Approvals Multiple myeloma Newly diagnosed multiple myeloma, in combination with dexamethasone - United States Thalomid in combination with dexamethasone is indicated for induction - Other international markets therapy prior to high dose chemotherapy with autologous stem cell rescue, for the treatment of patients with untreated multiple myeloma Multiple myeloma after failure of standard therapies (relapsed or refractory) - Other international markets Thalidomide Celgene TM in combination with melphalan and prednisone - European Union as a first line treatment for patients with untreated multiple myeloma - Other international markets who are aged sixty-five years of age or older or ineligible for high dose chemotherapy Erythema nodosum leprosum Cutaneous manifestations of moderate to severe erythema nodosum leprosum (ENL), an inflammatory complication of leprosy - United States - Other international markets Maintenance therapy for prevention and suppression of the cutaneous manifestation of ENL recurrence - United States - Other international markets ISTODAX (romidepsin): ISTODAX is administered by intravenous infusion for the treatment of patients with the diseases as indicated below and has received orphan drug designation for the treatment of non-Hodgkin's T-cell lymphomas, including CTCL and PTCL. Disease Geographic Approvals Cutaneous T-cell lymphoma (CTCL) in patients who have received at least - United States one prior systemic therapy - Other international markets Peripheral T-cell lymphoma (PTCL) in patients who have received at least - United States one prior therapy - Other international markets REVLIMID , POMALYST and THALOMID are distributed in the United States primarily through contracted pharmacies under the REVLIMID Risk Evaluation and Mitigation Strategy (REMS), POMALYST REMS TM and THALOMID REMS TM programs, respectively. These are proprietary risk-management distribution programs tailored specifically to provide for the safe and appropriate distribution and use of REVLIMID , POMALYST and THALOMID . Internationally, REVLIMID , THALOMID /Thalidomide Celgene TM and IMNOVID are distributed under mandatory risk-management distribution programs tailored to meet local authorities' specifications to provide for the product's safe and appropriate distribution and use. These programs may vary by country and, depending upon the country and the design of the risk-management program, the product may be sold through hospitals or retail pharmacies. VIDAZA , ABRAXANE , ISTODAX and OTEZLA are distributed through the more traditional pharmaceutical industry supply chain and are not subject to the same risk-management distribution programs as REVLIMID , POMALYST /IMNOVID and THALOMID /Thalidomide Celgene TM . PRECLINICAL AND CLINICAL-STAGE PIPELINE Our preclinical and clinical-stage pipeline of new drug candidates and cell therapies is highlighted by multiple classes of both small molecule and biologic therapeutic agents designed to selectively regulate disease-associated genes and proteins. These product candidates are at various stages of preclinical and clinical development. Immune-Inflammatory Diseases: OTEZLA (apremilast) a novel PDE4 inhibitor, is being studied in clinical trials in ankylosing spondylitis, Behet's disease, atopic dermatitis, and ulcerative colitis, and is approved in psoriasis and psoriatic arthritis. Differentiated oral therapies are advancing through mid to late stage trials in inflammatory diseases, including GED-0301, a potential first-in-class smad7 antisense treatment, with a phase III program in Crohn's Disease (CD) underway, and a phase II trial in UC initiated. In addition, ozanimod is a potential best-in-class S1P receptor modulator, with a phase III trial in UC underway, and a phase II trial in CD initiated. 5 Table of Contents Other oral therapies include, for rheumatology, OTEZLA , CC-220, and CC-292; for Dermatology, OTEZLA ; and for neuro-inflammation and MS, ozanimod and ABX-1431. Sotatercept (ACE-011) and luspatercept (ACE-536): We have collaborated with Acceleron Pharma, Inc. (Acceleron) to develop sotatercept and luspatercept. A phase II trial is in progress to evaluate the use of sotatercept in the treatment of patients with chronic kidney disease and phase III and phase II trials, respectively are evaluating luspatercept in the treatment of patients with beta-thalassemia and MDS. Epigenetics: The current insights into molecular regulation of genetic information (Epigenetics) has the potential to transform human diseases. We currently market two epigenetic modifiers, VIDAZA and ISTODAX . We have two phase III trials of CC-486 currently enrolling to evaluate CC-486 in the treatment of MDS and AML and two on-going phase II trials of CC-486 in solid tumors. We acquired the IDH2 inhibitor (AG-221/CC-90007) from Agios Pharmaceuticals, Inc. (Agios) and are currently evaluating its activity in a phase III trial in AML. We are also evaluating AG-120 (IDH1 inhibitor) and AG-881 (IDH1 and IDH2 inhibitor) in AML and solid tumors, in partnership with Agios. Protein Homeostasis : CC-122 (a PPM TM Pleiotropic Pathway Modifier) and CC-220 represent novel compounds that are in phase I and phase II clinical trials, both as single agents and in combination, for hematological and solid tumor cancers and inflammation and immunology diseases. They have been differentiated from previous compounds (such as thalidomide, lenalidomide and pomalidomide) and have been developed based on our scientific understanding of Cereblonmediated protein homeostasis. Immuno-Oncology : The strategic collaboration with Astra Zeneca/Medimmune has provided us with the opportunity to evaluate durvalumab, an anti-PDL-1 antibody, in hematological cancers in combination with REVLIMID , POMALYST , VIDAZA and CC-486. Additional collaborations with Juno Therapeutics, Inc. and bluebird bio, Inc. allow us to explore the potential of engineered CAR T-cell therapies in highly refractory hematological cancer patients. Our anti-CD47 antibody targeting macrophage activity, CC-90002, is currently in phase I trials, being evaluated for the treatment of solid tumor cancers, MM and AML. CC-90003, a covalent ERK inhibitor, is currently in a phase I trial targeting BRAF and RAS -mutated solid tumors. Cellular Therapies: At CCT we are conducting research with stem cells derived from the human placenta as well as from the umbilical cord. CCT is our research and development division dedicated to fulfilling the promise of cellular technologies by developing products and therapies to significantly benefit patients. Our goal is to develop proprietary cell therapy products for the treatment of unmet medical needs. Stem cell based therapies offer the potential to provide disease-modifying outcomes for serious diseases that lack adequate therapy. We have developed proprietary technology for collecting, processing and storing placental stem cells with potentially broad therapeutic applications in cancer, auto-immune diseases, and other inflammatory diseases. Our placental-derived, culture-expanded cellular therapy, PDA-002 (IM/SC injectable formulation), is in a phase II trial in patients with diabetic foot ulcers with and without peripheral artery disease and in a phase II trial for diabetic peripheral neuropathy. Our umbilical cord blood-derived, Natural Killer cell product PNK007 is nearing phase I trials for the treatment of hematological malignancies, as an allogeneic cell therapy. We also continue research to define the potential of placental-derived stem cells and to characterize other placental-derived products and other cell therapies. PRODUCT DEVELOPMENT We devote significant resources to research and development programs in an effort to discover and develop potential future product candidates. Research and development expenses amounted to $3.697 billion in 2015, $2.431 billion in 2014, and $2.226 billion in 2013. The product candidates in our pipeline are at various stages of preclinical and clinical development. The path to regulatory approval ordinarily includes three phases of clinical trials in which we collect data to support an application to regulatory authorities to allow us to market a product for treatment of a specified disease. There are many difficulties and uncertainties inherent in research and development of new products, resulting in a high rate of failure. To bring a drug from the discovery phase to regulatory approval, and ultimately to market, takes many years and significant cost. Failure can occur at any point in the process, including after the product is approved, based on post-marketing events or developments. New product candidates that appear promising in development may fail to reach the market or may have only limited commercial success because of efficacy or safety concerns, inability to obtain necessary regulatory approvals, limited scope of approved uses, reimbursement challenges, difficulty or excessive costs of manufacture, alternative therapies or infringement of the patents or intellectual property rights of others. Uncertainties in the U.S. Food and Drug Administration (FDA) approval process and the approval processes in other countries can result in delays in product launches and lost market opportunities. Consequently, it is very difficult to predict which products will ultimately be submitted for approval, which will obtain approval and which will be commercially viable and generate profits. Successful results in preclinical or clinical studies may not be an accurate predictor of the ultimate safety or effectiveness of a drug or product candidate. 6 Table of Contents Phase I Clinical Trials Phase I clinical trials begin when regulatory agencies allow initiation of clinical investigation of a new drug or product candidate and usually involve up to 80 healthy volunteers or subjects. These trials study a drug's safety profile, and may include a preliminary determination of a drug or product candidate's safe dosage range. The phase I clinical trial also determines how a drug is absorbed, distributed, metabolized and excreted by the body, and therefore the potential duration of its action. Phase I clinical trials generally take from one to three years to complete. Phase II Clinical Trials Phase II clinical trials are conducted on a limited number of subjects with the targeted disease. An initial evaluation of the drug's effectiveness on subjects is performed and additional information on the drug's safety and dosage range is obtained. Phase II clinical trials normally include up to several hundred subjects and may take as many as two to three years to complete. Phase III Clinical Trials Phase III clinical trials are typically controlled multi-center trials that involve a larger target patient population that normally consists of several hundred to several thousand subjects to ensure that study results are statistically significant. During phase III clinical trials, physicians monitor subjects to determine efficacy and to gather further information on safety. These trials are generally global in nature and are designed to generate the clinical data necessary to submit an application for marketing approval to regulatory agencies. Phase III clinical trial testing varies by disease state, but can often last from two to seven years. Regulatory Review If a product candidate successfully completes clinical trials and trial data is submitted to governmental regulators, such as the FDA in the United States or the European Commission (EC) in the European Union, the time to final marketing approval can vary from six months (for a U.S. filing that is designated for priority review by the FDA) to several years, depending on a number of variables, such as the disease state, the strength and complexity of the data presented, the novelty of the target or compound, risk-management approval and whether multiple rounds of review are required for the regulatory agency to evaluate the submission. There is no guarantee that a potential treatment will receive marketing approval, or that decisions on marketing approvals or treatment indications will be consistent across geographic areas. The current stage of development of our commercial stage products and new drug candidates in various areas of research are outlined in the following table: Area of Research Status Entered Current Status Multiple Myeloma (MM) REVLIMID POMALYST /IMNOVID Relapsed/refractory Post-approval research 1 2006 Newly diagnosed Post-approval research 1 Q1 2015 Maintenance Phase III 2004 1 Relapsed/refractory Post-approval research THALOMID /Thalidomide Celgene TM Newly diagnosed Post-approval research 1 2013 PD-L1 Inhibitor: durvalumab 2 MM Phase I Q4 2015 Anti-CD47 Antibody: CC-90002 MM Phase I Q1 2015 PPM TM Pleiotropic Pathway Modifier: CC122 MM Phase I Q4 2015 . Post-approval research 1 2004 Deletion 5q Post-approval research 1 2005 Non-deletion 5q Phase III 2010 Lower-risk Phase III 2013 Post hypomethylating agent (HMA) failure Phase II Q3 2015 2006 Myelodysplastic Syndromes (MDS) VIDAZA REVLIMID CC-486 7 Table of Contents luspatercept (ACE-536) 3 PD-L1 Inhibitor: durvalumab 2 MDS Phase II MDS Phase II Area of Research 2013 Q2 2015 Status Entered Current Status Acute Myeloid Leukemia (AML) VIDAZA AML (20%-30% blasts) (EU) Post-approval research 1 AML (>30% blasts) (EU) Approved CC-486 Post-induction AML maintenance Phase III 2013 IDH2 Inhibitor: AG-221 (CC-90007) 4 AML Phase III Q1 2016 IDH1 Inhibitor: AG-120 4 AML Phase II Q2 2015 DOT 1L Inhibitor: EPZ-5676 5 AML Phase I 2012 PAN-IDH Inhibitor: AG-881 4 AML Phase I Q3 2015 PD-L1 Inhibitor: durvalumab 2 AML Phase II Q4 2015 Mantle cell lymphoma: Relapsed/refractory (US) Post-approval research 1 2013 Mantle cell lymphoma: Relapsed/refractory (EU) Regulatory filing and approval 2014 Diffuse large B-cell: Maintenance Phase III 2009 Diffuse large B-cell (ABC-subtype): First line Phase III Q1 2015 Relapsed/refractory indolent lymphoma Phase III 2013 Follicular lymphoma: First-line Phase III 2011 Adult T-cell leukemia-lymphoma (Japan) Phase II 2012 Cutaneous T-cell lymphoma (US) 6 Post-approval research 1 2009 6 Post-approval research 1 2011 Peripheral T-cell lymphoma: Relapsed/refractory (Japan) Phase II 2013 Peripheral T-cell lymphoma: First-line Phase III 2013 Diffuse large B-cell lymphoma Phase Ib 2014 Relapsed/refractory indolent lymphoma Phase I 2014 CC-486 Lymphoma Phase I Q3 2015 PD-L1 Inhibitor: durvalumab 2 Lymphoma Phase I Q1 2016 Anti-CD47 Antibody: CC-90002 Lymphoma Phase I Q1 2016 Maintenance: Second-line Phase III CLL Phase I Q1 2015 CLL Phase I Q4 2015 Beta-thalassemia Phase III Q4 2015 2008 Q4 2015 Lymphoma REVLIMID ISTODAX Peripheral T-cell lymphoma: Relapsed/refractory (US) PPM TM Pleiotropic Pathway Modifier: CC-122 Chronic Lymphocytic Leukemia (CLL) REVLIMID PPM TM Pleiotropic Pathway Modifier: CC-122 PD-L1 Inhibitor: durvalumab 2 2009 Beta Thalassemia luspatercept (ACE-536) 3 8 Table of Contents Area of Research Status Entered Current Status Solid Tumors ABRAXANE CC-486 IDH1 Inhibitor: AG-120 4 IDH2 Inhibitor: AG-221 (CC-90007) 4 PPM TM Pleiotropic Pathway Modifier: CC-122 Breast: Metastatic Post-approval research 1 2005 Breast: Metastatic (first-line, triple negative) Phase II/III 2013 Non-small cell lung: Advanced (first-line) Post-approval research 1 2012 Pancreatic: Advanced (first-line) Post-approval research 1 2013 Pancreatic: Adjuvant Phase III 2014 Gastric: Metastatic (Japan) 7 Regulatory filing and approval 2013 Breast: Metastatic Phase II Q1 2015 Non-small cell lung: Advanced Phase II Q3 2015 Solid tumors Phase I Q1 2016 Solid tumors Phase I Q4 2015 Glioblastoma multiforme Phase I 2013 Hepatocellular carcinoma Phase I Q1 2015 ERK Inhibitor: CC-90003 Solid tumors Phase I Q1 2015 Anti-CD47 Antibody: CC-90002 Solid tumors Phase I Q1 2015 Solid tumors Phase I Q3 2015 Psoriatic arthritis Post-approval research 1 2014 Psoriasis Post-approval research 1 2014 Psoriasis (Japan) Phase III 2013 Ankylosing spondylitis Phase III 2012 Behet's disease Phase III 2014 Atopic dermatitis Phase II 2014 Ulcerative colitis Phase II 2014 Crohn's disease Phase III Q3 2015 Ulcerative colitis Phase II Q3 2015 Relapsing multiple sclerosis Phase III 2013 Ulcerative colitis Phase III Q3 2015 Crohn's disease Phase II Q4 2015 Eosinophilic esophagitis Phase II 2014 PAN-IDH Inhibitor: AG-881 4 Anti-Inflammatory OTEZLA (apremilast) GED-0301 ozanimod RPC-4046 8 sotatercept (ACE-011) 3 Chronic kidney disease Phase II 2013 CC-220 Systemic lupus erythematosus (SLE) Phase II 2014 CC-90001 Fibrosis Phase I 2014 9 Table of Contents Area of Research Status Entered Current Status Cellular Therapies PDA-002 Peripheral artery disease/Diabetic foot ulcers Celgene-sponsored and Celgene-supported studies. 2 In collaboration with MedImmune Limited, a wholly owned subsidiary of AstraZeneca PLC. 3 In collaboration with Acceleron Pharma, Inc. 4 In collaboration with Agios Pharmaceuticals, Inc. 5 In collaboration with Epizyme, Inc. 6 Regulatory approval based on pivotal phase II data. 7 Trial conducted by licensee partner, Taiho Pharmaceuticals Co. Ltd. 8 Under co-development option with AbbVie, Inc. Phase II 2014 1 Includes PATENTS AND PROPRIETARY TECHNOLOGY We consider intellectual property protection to be critical to our operations. For many of our products, in addition to compound (e.g., drug substance) and composition (e.g., drug product) patents, we hold polymorph, formulation, methods of treatment or use, delivery mechanism and methods of manufacture patents, as well as manufacturing trade secrets, that may extend exclusivity beyond the expiration of the compound patent or composition patent. Key patent expirations and exclusivities: The following table shows the expected expiration dates in the United States and Europe of the last-to-expire period of exclusivity (primary patent or regulatory approval) related to our primary marketed drug products. In some instances, there are later-expiring patents relating to particular forms or compositions, methods of manufacturing, or use of the drug in the treatment of particular diseases or conditions. However, such additional patents may not protect our drug products from generic competition after the expiration of the primary patent. REVLIMID brand drug U.S. 1 Europe 2 2024 3 2027 (U.S. and European use patents) THALOMID brand drug 2023 2019 2011 4 2019 2026 2022 (U.S. formulation/ European use patents) VIDAZA brand drug (U.S. use patent and EMA regulatory exclusivities only) ABRAXANE brand drug (U.S. use patent and European use/formulation patents) ISTODAX brand drug 2021 5 6 (U.S. drug substance patents) POMALYST /IMNOVID brand drug 2024 7 2023 8 2015 N/A 2015 2018 2024 9 2028 3 (U.S. drug substance/use patent) FOCALIN brand drug (U.S. use patents) FOCALIN XR brand drug (U.S. use patent/European formulation patent) (European Patent Office (EPO) drug product patent) OTEZLA brand drug (U.S./European drug substance patent) _____________________ 10 Table of Contents 1 2 3 4 5 6 7 8 9 The patents covering these drugs include patents listed in the U.S. Orange Book. The date provided reflects the last-to-expire key patent as listed in the U.S. Orange Book, which may not be the last date on which all relevant patents ( e.g. , polymorph and manufacturing patents) expire. In December 2015, we announced the settlement of litigations with Natco Pharma Ltd. and its partners and affiliates, relating to certain patents for REVLIMID . As part of the settlement, we agreed to provide Natco with a license to Celgene's patents required to manufacture and sell an unlimited quantity of generic lenalidomide in the U.S. beginning on January 31, 2026. In addition, Natco will receive a volume-limited license to sell generic lenalidomide in the U.S. commencing in March 2022, which is expected to be a mid-single-digit percentage of the total lenalidomide capsules dispensed in the U.S. during the first year of entry. The volume limitation is expected to increase gradually each twelve months until March 2025, and is not expected to exceed one-third of the total lenalidomide capsules dispensed in the U.S. in the final year of the volume-limited license. Natco's ability to market generic lenalidomide in the U.S. will be contingent on its obtaining approval of an Abbreviated New Drug Application. See Note 18 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for more information. Subject of ongoing EPO opposition proceedings. See Note 18 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for more information. We contracted with Sandoz to sell azacitidine for injection, which they launched after the introduction of a generic version of VIDAZA in the United States by a competitor in September 2013. See Note 18 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K for more information relating to the settlement of certain patent claims. Based on ten years of regulatory exclusivity upon approval of an application for an orphan indication. Application for Patent Term Extension pending, receipt of which would extend exclusivity through 2025. Based on ten years regulatory exclusivity. A patent application is pending, receipt of which would likely extend exclusivity beyond 2023. Application for Patent Term Extension pending, receipt of which would extend exclusivity through 2028. The term of individual patents and patent applications will depend upon the legal term of the patents in the countries in which they are obtained. In the United States, the patent term is 20 years from the date of filing of the patent application although term extensions are available. We may obtain patents for certain products many years before marketing approval is obtained for those products. Because of the limited life of patents, which ordinarily commences prior to the commercial sale of the related product, the commercial value of the patent may be limited. However, we may be able to obtain patent term extensions upon marketing approval. For example, supplementary protection certificates (SPCs) on some of our products have been granted in a number of European countries, compensating in part for delays in obtaining marketing approval. Also, under the Hatch-Waxman Act, the term of a patent that covers an FDA-approved drug may also be eligible for patent term extension (for up to five years, but not beyond a total of 14 years from the date of product approval) as compensation for patent term lost during the FDA regulatory review process. When possible, depending upon the length of clinical trials and other factors involved in the filing of a new drug application (NDA) with the FDA, we expect to apply for patent term extensions for patents covering our drug products and their use in treating various diseases. In most cases, our drugs are also covered in foreign countries by patents and patent applications that correspond to certain of those listed in the U.S. Orange Book. For example, patents related to the active pharmaceutical ingredient, uses and pharmaceutical compositions for most of our drugs have been granted in Europe. Although certain of the patents granted by the regulatory authorities of the European Union may expire at specific dates, patents granted in certain European countries, such as Spain, France, Italy, Germany and the United Kingdom, will extend beyond such European Union patent expiration date due to the SPCs granted in these countries for many of our drugs. The table above may also reflect patents in Europe that relate to certain polymorphic forms of the active pharmaceutical ingredient of our drugs. Patent term extensions have been granted in other markets for certain of our patents related to REVLIMID . Patent term extensions for certain of our patents related to lenalidomide have been granted in Europe, Australia, Korea, Japan and Russia. Further, patent term extensions for certain of our patents related to ABRAXANE have been secured and/or are actively being sought in Europe, Australia, Japan, Russia and Korea. We are also considering alternative exclusivity strategies, mostly through international treaties, in a variety of countries throughout Latin America. The existence of issued patents does not guarantee our right to practice the patented technology or commercialize the patented product. Third parties may have or obtain rights to patents which could be used to prevent or attempt to prevent us from commercializing the patented product candidates. Patents relating to pharmaceutical, biopharmaceutical and biotechnology products, compounds and processes, such as those that cover our existing compounds, products and processes and those that we will likely file in the future, do not always provide complete or adequate protection. Future litigation or re-examination proceedings (including oppositions and invalidity proceedings such as interparty reviews) regarding the enforcement or validity of our existing patents or any future patents could invalidate such patents or substantially reduce their protection. 11 Table of Contents Our patents are subject to challenge by generic drug companies and others for a variety of reasons. For more information regarding challenges to certain of our patents, see Item 1A. "Risk Factors\" and Note 18 of Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K. As of December 31, 2015 , we owned or had exclusively licensed 644 issued U.S. patents and 596 additional pending U.S. patent applications. We have a policy to seek broad global patent protection for our inventions and have foreign patent rights corresponding to most of our U.S. patents. Trade secret strategies and intellectual property rights in our brand names, logos and trademarks are also important to our business. We maintain both registered and common law trademarks. Common law trademark protection typically continues where and for as long as the mark is used. Registered trademarks continue in each country for as long as the trademark is registered. GOVERNMENTAL REGULATION General: Regulation by governmental authorities in the United States and other countries is a significant factor in the manufacture and marketing of pharmaceuticals and in our ongoing research and development activities. Our therapeutic products require regulatory approval by governmental agencies. Human therapeutic products are subject to rigorous preclinical testing and clinical trials and other pre-marketing and post-marketing approval requirements of the FDA and regulatory authorities in other countries. In the United States, various federal and, in some cases, state statutes and regulations also govern, or impact the manufacturing, testing for safety and effectiveness, labeling, storage, record-keeping and marketing of such products. The lengthy process of seeking required approvals and the continuing need for compliance with applicable statutes and regulations, require the expenditure of substantial resources. Regulatory approval, if and when obtained, may be limited in scope which may significantly limit the uses for which a product may be promoted. Further, approved drugs, as well as their manufacturers, are subject to ongoing post-marketing review, inspection and discovery of previously unknown problems with such products or the manufacturing or quality control procedures used in their production, which may result in restrictions on their manufacture, sale or use or in their withdrawal from the market. Any failure or delay by us, our suppliers of manufactured drug product, collaborators or licensees, in obtaining regulatory approvals could adversely affect the marketing of our products and our ability to receive product revenue, license revenue or profit sharing payments. For more information, see Item 1A. \"Risk Factors.\" Clinical Development: Before a product may be administered to human subjects, it must undergo preclinical testing. Preclinical tests include laboratory evaluation of a product candidate's chemistry and biological activities and animal studies to assess potential safety and efficacy. The results of these studies must be submitted to the FDA as part of an Investigational New Drug (IND) application which must be reviewed by the FDA primarily for safety considerations before clinical trials in humans can begin. Typically, clinical trials in humans involve a three-phase process as previously described under \"- Product Development.\" In some cases, further studies beyond the three-phase clinical trial process described above are required as a condition for an NDA or biologics license application (BLA) approval. The FDA requires monitoring of all aspects of clinical trials and reports of all adverse events must be made to the FDA. The FDA may also require the conduct of pediatric studies for the drug and indication either before or after submission of an NDA. FDA Review and Approval: The results of the preclinical testing and clinical trials are submitted to the FDA as part of an NDA or BLA for evaluation to determine if there is substantial evidence that the product is sufficiently safe and effective to warrant approval. In responding to an NDA or BLA, the FDA may grant marketing approval, deny approval, or request additional information, including data from new clinical trials. Expedited Programs for Serious Conditions: The FDA has developed four distinct approaches to make new drugs available as rapidly as possible in cases where there is no available treatment or there are advantages over existing treatments. The FDA may grant \"accelerated approval\" to products that have been studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit to patients over existing treatments. For accelerated approval, the product must have an effect on a surrogate endpoint or an intermediate clinical endpoint that is considered reasonably likely to predict the clinical benefit of a drug, such as an effect on irreversible morbidity and mortality. When approval is based on surrogate endpoints or clinical endpoints other than survival or morbidity, the sponsor will be required to conduct additional post-approval clinical studies to verify and describe clinical benefit. These studies are known as "confirmatory trials." Approval of a drug may be withdrawn or the labeled indication of the drug changed if these trials fail to verify clinical benefit or do not demonstrate sufficient clinical benefit to justify the risks associated with the drug. 12 Table of Contents The FDA may grant \"fast track\" status to products that treat serious diseases or conditions and demonstrate the potential to address an unmet medical need. Fast track is a process designed to facilitate the development and expedite the review of such products by providing, among other things, more frequent meetings with the FDA to discuss the product's development plan, more frequent written correspondence from the FDA about trial design, eligibility for accelerated approval if relevant criteria are met, and rolling review, which allows submission of individually completed sections of an NDA or BLA for FDA review before the entire submission is completed. Fast track status does not ensure that a product will be developed more quickly or receive FDA approval. \"Breakthrough Therapy\" designation is a process designed to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on